I had a leak from my upstairs bathroom that came into my kitchen. The repairs for the leak can be done through the kitchen ceiling where the damage is. My ceiling is plaster that has been wallpapered to look like a tin ceiling. All of this needs to be replaced. The insurance company gave me money for a drywall repair to my ceiling. Can that be done, or does it have to be plaster? I plan to have it repapered.
Depending on the thickness of the existing plaster, a drywall patch with suitable support behind it (with "mud" or patching compound over it to merge the edges with existing plaster and achieve a smooth surface) may be a perfectly reasonable solution. Getting it really smooth and level so the patch doesn't "telegraph" through the wallpaper will take some work and patience; sand, mud, sand, mud, repeat until a raking light shows no irregularities from any direction.
If your insurance company gave you money to repair a plaster ceiling with drywall - they are probably just trying to get off as cheap as possible, and hoping to get away with it. Joining the two systems together or even replacing the entire ceiling with drywall - is usually much more labor intensive, than just plastering the damaged section and blending it into the old work.
I have done many such repairs and repairing plaster with plaster, always won out in the end. However, if the funds that you acquired, are sufficient to go ahead and do the whole ceiling, then plan on going wall to wall with your repair.